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Q1 2012 EARNINGS CALL – Black Hills Corporation

Black Hills Corporation · May 4, 2012 · 50 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 1
    2012 First Quarter Review May 4, 2012 1
  2. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 2
    Discussion Agenda First Quarter Review David Emery Chairman, President and CEO Financial Update Tony Cleberg Executive Vice President and CFO Strategic Overview David Emery Chairman, President and CEO Q&A 3
  3. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 3
    Q1 Overview 4
  4. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 4
    Q1 2012 Highlights Business Environment Record breaking warm weather across utility service territories Lowest natural gas prices since 2001 negatively impacted financial results Utilities Colorado Electric - New 180 MW natural…
  5. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 5
    Q1 2012 Financial Highlights Income from Continuing Operations, as adjusted* Key Earnings Drivers (in millions) (per share) 30.0 28.5 0.65 0.7 0.64 New COE generation in service and rates 25.6 25.0 0.6 implemented Jan 1 New IPP…
  6. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 6
    Q1 2012 Financial Highlights Change in Income from Continuing Operations, as adjusted*, from Prior Year (in millions) 25.6 Q1 2011 -1.4 Electric Utilities -3.5 Gas Utilities 5.9 Power Generation 2.3 Coal Mining 0.9 Oil &…
  7. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 7
    Financial Overview 8
  8. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 8
    Earnings Per Share Analysis Q1-2011 Q2-2011 Q3-2011 Q4-2011 Q1-2012 Net income 0.68 0.19 (0.27) 0.60 0.68 Loss (gain) from discontinued operations 0.05 (0.10) (0.02) (0.16) 0.12 Income (loss) from continuing operations 0.73 0.09…
  9. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 9
    Income Statement (In millions, except per share amounts) 2012 2011 QTD QTD Comments Revenue 365.9 400.8 Gas Utilities declined 49.8 Gross margin 208.7 190.3 Colorado generation in service 1/1/12 Operating expense (100.1) (100.0)…
  10. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 10
    Discontinued Operations Sale of Enserco Energy Closed on Feb. 29, 2012 (in millions) Sale price 108.8 Cash distributed prior to close 57.5 Net-cash proceeds 166.3 Book value 2/29/12 (includes cash distributed) (165.4)…
  11. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 11
    Q1 Revenue/Op Income Summary Total Revenue 159.2 Electric Util (in millions) 148.3 400.8 Gas Util 180.5 230.3 Power Gen 19.6 7.6 365.9 15.0 Coal Mining 15.5 Q1 2012 Oil & Gas 21.6 17.9 Q1 2011 Q1 2012 Q1 2011 I/C…
  12. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 12
    Q1 Utilities Revenue/Op Income Electric Utilities (in millions) 159.2 148.3 Change Q1 Key Performance Drivers Q1 2012 New Colorado generation and Q1 2011 rates Warmer than normal weather 27.3 24.3 Revenue Operating Income…
  13. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 13
    Q1 Non-Regulated Energy Revenue/Op Income Power Generation (in millions) 19.6 Q1 2012 Change Q1 Key Performance Drivers Q1 2011 New Colorado generation in 11.4 service 7.6 Higher interest expense 2.4 Revenue Operating…
  14. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 14
    Q1 Non-Regulated Energy Revenue/Op Income Oil & Gas (in millions) 21.6 Change Q1 Key Performance Drivers 17.9 Q1 2012 Increased natural gas volumes Q1 2011 and higher crude oil volumes and prices Lower natural gas prices 1.5…
  15. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 15
    Capital Structure 16
  16. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 16
    Revised 2012 Earnings Guidance Black Hills now expects its 2012 earnings per share, as adjusted, from continuing operations to be in the range of 1.90 to 2.10 versus the 2.00 to 2.20 earnings per share range most recently issued on Feb.…
  17. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 17
    Strategic Overview 18
  18. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 18
    Long Term Objectives Continue focus on growth from core businesses within Midwest region Improve profitability by: Growing organically through investment in rate-based, vertically-integrated assets Controlling costs through continuous…
  19. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 19
    Capital Investments by Segment Historical and Forecasted Capital Expenditures (in millions) 2009 2010 2011 2012E* 2013E* 2014E* Electric Utilities Generation 66 145 55 Transmission 79 40 24 Environmental 4 30 26 Other 73 89 82…
  20. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 20
    Growth Opportunities Announced Future 2012-2016 Capital Expenditures* Excludes routine capital expenditures for maintenance of assets (2015-2016 Expected In- (in millions) Service Date 2012 2013 2014 or unscheduled) Total…
  21. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 21
    Colorado Electric - Wind Project New Wind Generation Helps Meet Renewable Portfolio Standards In Colorado Overview: Project consists of sixteen 1.8 MW turbines for total 29 MW; ready to serve Colorado Electrics utility customers in Q4…
  22. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 22
    Utilities - Regulatory Updates Joint Cheyenne Light and Black Hills Power Generation Project Progressing On Nov. 1, 2011, utilities filed joint request for CPCN for new 237 million, 132 MW project in Cheyenne, Wyo. Project includes…
  23. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 23
    Impact of EPA Regulations Industrial & Commercial Boiler Regulations for Area Sources of Hazardous Air Pollutants (Boiler MACT Rule) Rules effective May 20, 2011 with compliance deadline of March 21, 2014 Anticipate retirement of…
  24. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 24
    Environmental Control Equipment Legend: X = current emission control equipment O = emission control equipment to be added and projected time frame for installation * = closure by 2014 + = Minor modifications to existing scrubbers…
  25. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 25
    Oil & Gas 26
  26. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 26
    Oil and Gas Strategy Capital expenditures may vary depending on oil and gas pricing environment Further define Mancos shale gas reserve potential while minimizing capital outlay San Juan and Piceance Basin Mancos Shale One rig…
  27. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 27
    Oil and Gas Strategy - Mancos Shale Update Three successful test wells drilled in 2011 affirmed potential in San Juan and Piceance Basins Second Piceance Basin test well produced condensate and higher Btu gas Further delineation…
  28. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 28
    2012 Scorecard Strategy 2012 Progress and Future Initiatives UTILITIES Complete construction of Colorado Electric 29 MW wind project (Q4) + Acquire regulated utility properties in our geographic region Complete CPCN process for third…
  29. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 29
    Q1 2012 Summary Focused on Serving Customers and Building Shareholder Value Efficient operations and continuous improvement program mitigating impact of warmer than normal weather Commercial operation of new generation in Pueblo…
  30. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 30
    Questions 31
  31. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 31
    Appendix 32
  32. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 32
    Black Hills Corporation Overview A diversified energy company with a tradition of exemplary service and a vision to be the energy partner of choice. Based in Rapid City, SD, with corporate offices in Denver, CO, and Papillion, NE, the…
  33. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 33
    Electric and Natural Gas Utilities Regulated Electric and Natural Gas Utilities Serving over 765,000 customers Cheyenne Iowa Black Hills Nebraska Gas Light Power Gas Cheyenne Colorado Light Gas Kansas Gas Colorado…
  34. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 34
    Efficient Cost Recovery Electric Utility Cost Recovery Mechanisms * Jurisdiction Environmental DSM/ Energy Fuel Cost Trans- Purchased Fixed Cost Cost Efficiency mission Power Recovery BHP - South Dakota BHP - Wyoming BHP - Montana…
  35. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 35
    95.0 Q1 12 Q1 2012 Electric Utility Generation Availability(%) 90.8 2,432 98.5 Q4 11 2,238 Q4 2011 (Total for all gas service areas weighted by 90.1 152 Q3 2011 Gas Utility Heating Degree Days 98.6 * Reflects…
  36. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 36
    Environmental Impact Policy Assessment RICE (Recipricating National Internal Ambient Air Hazardous Air Rules Combustion Quality Regional Haze Coal Ash Greenhouse Gas (MACT) Engine) Rules Standards Standards Clean Water Act Rule…
  37. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 37
    Non-Regulated Energy Power Generation Coal Mining Ownership in three power generation facilities totaling 309 MW Serves as fuel supply to adjacent mine mouth electric power Wygen I - 69 MW of a 90 MW coal-fired facility in Gillette,…
  38. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 38
    Q1 2012 Non-Regulated Update IPP Generation Availability (%) Coal Production Mining Cost Per Ton of Coal * (Coal in million tons Overburden in million cubic yards) Overburden Removed Coal Production 12 10 100 99.5 100…
  39. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 39
    Coal Mining 10 Year Revised Mine Plan Minimizes short-term overburden removal and haul distances Note: Final permit received first week in April 40
  40. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 40
    Coal Contracts Summary Approximately 50% of coal production sold under contracts that include price adjustments based on actual mining costs Most of the remaining 50% of coal production sold under contracts where sales price changes…
  41. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 41
    Oil and Gas Mancos Shale Update 2011 Mancos Drilling Program: Well Test Summary 30-Day Avg. Production as of 4/30/12 Lateral Initial Gas Conden- Frac Load Length Frac Rate Gas sate Water Basin/Well Feet Stages MMCFD MMCFD Bbls Bbls…
  42. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 42
    Piceance Basin Mancos Shale Encana LEGEND Kimball Mtn DH02-6 BHPP Piceance Basin Acreage Oooo COGCC permitted wells oooooo xx ENCANA units McKay Unit Homer Deep HDU 21-41H Masagar Unit Noble Orchard Dutton 1-34B Unit…
  43. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 43
    Mancos Shale Production Piceance Basin Production Rates in Mcf/D 100,000 10,000 Gas Flow in Mcf/D 1,000 100 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Months Encana - Keinath…
  44. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 44
    San Juan Basin Mancos Shale 16 miles CO 45 miles San Juan Basin NM Encana: Two Mancos horizontal wells, One vertical pilot drilled No data Five locations 45
  45. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 45
    Mancos Shale Production San Juan Basin Production Rates in Mcf/D 100,000 10,000 Gas Flow in Mcf/D 1,000 100 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Months Williams - Rosa Unit 634A (M) Williams - Rosa Unit…
  46. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 46
    Credit Facilities and Debt Primary Credit Facilities Capacity Utilized Available As of 3/31/2012 500 million 75 million Corporate Revolver - Matures Feb. 2017 with 250 million 384 million 41 million (LC) accordion feature Term…
  47. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 47
    Credit Ratings Black Hills Corporation S&P Moodys Fitch Long-Term Issuer BBB- Baa3 BBB- Senior Unsecured BBB- Baa3 BBB- Outlook Stable Stable Stable Black Hills Power S&P Moodys Fitch Long-Term Issuer BBB- Baa2 BBB Senior…
  48. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 48
    Use of Non-GAAP Financial Measures - EBITDA (in thousands) Q1 2012 Q1 2011 Income from continuing operations 35,271 29,068 Depreciation, depletion and amortization 38,559 31,910 Interest Expense, net 28,798 22,858 Unrealized gain…
  49. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 49
    Use of Non-GAAP Financial Measures Income from Continuing Operations (in thousands, after-tax) Electric Gas Power Coal Oil and QTD March 31, 2012 Utilities Utilities Generation Mining Gas Corporate Total Income (loss) from continuing…
  50. Q1 2012 EARNINGS CALL – Black Hills Corporation – slide 50
    Vision: Be the energy partner of choice. Mission: Improving life with energy. 51

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